My_question_is: Both question: Dave, When I filed exit tax return in 2003 and moved to USA, now I realized that T1161 form was not submitted. I own a house I Ontario and I want to sell it now and there will be no capital gain housing prices went down since. When I will sell my house what implication will there be, Tax or penalty (because of not filing T1161). I would appreciate your advice. Thanks
david ingram replies:
You will need to file Form T2091 and forms T2062 and T2062A within ten days of the actual sale. If you miss the ten days, the penalty is $25.00 a day for each owner with a minimum of $100 and to a maximum of $2,500 each.
You will need to get an appraisal of what the property was worth the day you left. Get this from the realtor who is selling the house. i.e. when he gives you his or her comparable market analysis for today, have the realtor do one for May 1, 2003 or whatever other day you left the country.
I think you will be surprised at the values however. There should be a taxable profit unless you are in a destitute mining town.
In 2003, the Average price of a home in the GTA (Greater Toronto area) was $293,067
In October 2009, the average in the GTA is just below $400,000. and the average in the Toronto 416 area code is about $464,000
In July 2009, the average in the GTA was $395,414 and the Toronto 416 code was $421,110.
In July 2008, the average in the GTA was $355,401 and the Toronto 416 code was $395.343
You can expect to pay some tax to Canada.
Whatever you do, do NOT file a late T1161. That will guarantee you a penalty of about $4,000 each with interest and to date, I have not seen (knock on wood) the CRA instigate a late filing penalty for the T1161 upon a person in your position.
Remember who and where we are when you need that paperwork done. Although it may seem silly to send the work to us here in Vancouver, it will be correct and we do enough of them that we are not learning on your dime.
We can also blend them in with the US returns at the same time.
Remember that even if the property was sold at the same value, it WILL generate a taxable US profit because of the difference in exchange rates
The 2003 exchange rate was 1.40146175 and .71354070
You have made 25% on its value in the exchange rate .
If it was worth $200,000 Left, it is now worth at least $250,000 US when sold,.
david
This older email will help as well
---------------------------------------------------------------------------david ingram replies:
6. Where an individual (other than a citizen of the United States) who was a resident of Canada became a resident of the United States, in determining his liability to United States taxation in respect of any gain from the alienation of a principal residence in Canada owned by him at the time he ceased to be a resident of Canada, the adjusted basis of such property shall be no less than its fair market value at that time.
7. Where at any time an individual is treated for the purposes of taxation by a Contracting State as having alienated a property and is taxed in that State by reason thereof and the domestic law of the other Contracting State at such time defers (but does not forgive) taxation, that individual may elect in his annual return of income for the year of such alienation to be liable to tax in the other Contracting State in that year as if he had, immediately before that time, sold and repurchased such property for an amount equal to its fair market value at that time.
Paragraph 6 deals with the principal residence which was tax free up to the date of departure.CEN-TA Cross Border Services - Tax, Visas, Immigration
http://www.centa.com/article.php/2010010512454649